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The China-Myanmar pipeline is a vital artery connecting both nations
By Yu Lintao  ·  2017-05-13  ·   Source: | NO. 20 MAY 18, 2017
Locals from the village of Phayagyigon in Mandalay fetch water from the new drinking water supply system funded and built within the framework of the Myanmar-China oil and gas pipeline project (FILE)

Zayar Oo has never been to China and has little idea of what it is like there. Yet there is a strong link between the 37-year-old villager from Myanmar and the country's northern neighbor—the Myanmar-China crude oil pipeline which snakes from Made Island on the western coast of Myanmar to Ruili in southwest China's Yunnan Province.

Zayar Oo has been working as a special vehicle driver at the crude oil terminal on Made Island since 2014. "Not only do I have a stable job and sound income but the lives of my fellow villagers have also been greatly improved due to the project," he said.

The crude oil pipeline project is a part of the Myanmar-China oil and gas pipeline project which involves the construction of two separate, parallel pipelines for transporting crude oil and natural gas produced in other parts of the world via Myanmar to China. The 771-km crude oil pipeline is jointly built and operated by the China National Petroleum Corp. (CNPC)—China's largest oil and gas producer—and the Myanmar Oil and Gas Enterprise. The 793-km gas pipeline starts from Ramree Island, Kyaukpyu, and has been in operation since 2013 with four offloading points within Myanmar: Kyaukpyu, Yenangyaung, Taungtha and Mandalay.

Zayar Oo was originally a farmer in Yangon, but after marrying a girl from Made Island in 2009, he decided to settle in the village of Ywama—one of the three villages on the island. "When I first set foot on this island eight years ago, it was a barren land, no electricity, drivable roads or clean drinking water. Its inhabitants mainly depended on farming and fishing," Zayar Oo told Beijing Review. "Now almost everything has changed since the construction of the pipeline project began. Roads, tap water, a big reservoir with water purification facilities, electricity, schools and clinics are all easily accessible on the island."

An oil tanker is prepared to offload crude oil at the Made Island oil port on April 10 (FILE)

Open to the outside

In the view of U Hla Tun—a local villager from Ywama, one change the project has brought for local villagers is an expanded horizon. Without electricity, the island was almost completely isolated. But now some families have bought TV sets, and villagers have begun to learn more about the world, said the 55-year-old. "The pipeline developers have installed a power supply system for the villagers. Now they have electricity from 6 to 10 p.m.," U Hla Tun said. "We are told that in the near future, we can have electricity 24/7 once the power grid is connected with the gas-fired power station in Kyaukpyu."

Zayar Oo, who has two young daughters, has a positive outlook on their access to better education. According to him, besides basic literacy, very few children on the island were able to get further education in the past, but things began to change as two more schools were built with the assistance of the pipeline developers.

However, when the pipeline was first developed, some villagers had doubts that once their land was taken away for project construction, they would lose their source of livelihood. As a result, protests began to start.

"We thought our land would be taken gratuitously, but it turned out not to be the case. We were offered monetary compensation," said U Hla Tun. "My two acres were compensated with 30 million kyat (around $38,000 in 2010). It was not a small amount of money for us. The compensation and the interest on it can support my family. In addition, I still have eight acres of land to grow fruits and rice. "

Myanmar is among the most impoverished countries in the world. According to data from UNDP, Myanmar's annual per-capita income is around $702, but the real income of Myanmar people in remote areas such as Made Island is much lower.

Some villagers lost part or all of their land, but some of them also found jobs in the pipeline project, according to Hla Win, a villager who runs a grocery in Ywama. "I heard that one person in the village used the compensation to start a small business, and another found a stable job in the oil port," Hla Win told Beijing Review. "Of course, there are others who are lazy or not good at business and are living in poor conditions after squandering their compensation."

According to Han Jianqiang, Director of the Made Island oil terminal, of the 500 employees, more than 300 are locals, around 50 are from the island's villages, and 10 are working in key technical posts. In the whole process of the port's construction, more than 1,000 local villagers were employed, accounting for one third of the total population of the island.

"Besides economic compensation, improving local infrastructure and offering job opportunities, we have also provided farming training for villagers to increase their income," said Han. "Gradually, they became aware that rather than creating an adverse impact, the project benefited them."

According to Han, some protests against the project were orchestrated by some organizations in the name of environmental protection rather than from the villagers who had intrinsic worries about their livelihood.

U Hla Tun told Beijing Review that apart from their living conditions improving, he hasn't seen any changes to the island's environment. Hla Win said the developers did dig some ditches to lay the pipelines on the island, but no wide-scale damage has been made to the environment.

After the construction of the underground pipelines was completed, Han said the farmlands were handed over to local villagers for farming, and staff were arranged to patrol along the pipeline to prevent subsidence. "Most villagers can still continue their normal farming and fishing lifestyles," said Han.

According to him, the two-pipeline project can bring the country considerable direct economic benefits, including tax revenue, investment dividends, road tolls, transit fees and training funds. For instance, according to data from CNPC, Myanmar has earned $13.81 million from road tolls as well as $1 per ton of crude oil transported.

In addition, the project's developer has attached much importance to its social responsibilities. CNPC data show that the whole project employed 6,000 local workers at its peak, and has cultivated a large number of energy development-related professionals. At present, more than 800 local staff work on the project, accounting for 72 percent of the total. Moreover, 58 Myanmar college graduates were funded within the framework of the project to go to China to study construction and operation, and two were funded for post-graduate studies. By the end of March this year, the project had invested $23 million to help build and restore 72 schools, 29 hospitals and clinics, six water supply systems, five power supply systems and two telephone signal stations.

A “mobile” medical team from China provides health check for locals at Sagaing Province, Myanmar, on November 4, 2016 (XINHUA)

Collaborating and sharing

The Myanmar-China crude oil pipeline is designed with an annual transmission capacity of 22 million tons. On April 10, the 140,000-metric-ton oil tanker Suezmax began offloading crude oil at the Made Island oil port and into the pipeline. Once the pipeline becomes fully operational, Myanmar can also be provided with 2 million tons of crude oil annually through several offloading stations. Since it began operation in 2013, the parallel gas pipeline has already transmitted more than 13.34 billion cubic meters of gas to China, while Myanmar has used 1.55 billion cubic meters, according to data provided by CNPC.

Jiang Changliang, President of CNPC South-East Asia Pipeline Co. (SEAP), told Beijing Review that the two pipelines have not only provided China a strategic energy channel to guard against risks to maritime energy transport systems, but also constitute an energy artery for Myanmar's economy.

"China's southwestern regions including the provinces of Yunnan and Guizhou have long suffered from energy shortages. The oil and gas pipelines have guaranteed the energy security of the region. In addition, the pipelines give China a new choice for energy transport besides the Strait of Malacca," said Jiang. "And for Myanmar, the two pipelines constitute an important energy artery for its industrial development. To my knowledge, due to shortage of power, many factories in Myanmar are often in a semi-idle status, severely hindering the country's economic development."

According to Myanmar media reports, by 2016, Myanmar's installed capacity was still less than 6,000 mw, far from sufficient. Among the more than 10 million households in the country, only around 34 percent have access to electricity.

Ting Win Aung, an interpreter residing in Yangon, told Beijing Review that even residents in Yangon suffer from power shortages. "Every year from March to May, the hottest season in Yangon, power failure becomes frequent. Some factories have to get generators in order to reduce the losses caused by power cuts."

Nyunt Maung Shein, Chairman of Myanmar Institute for Strategic and International Studies, shared a similar view, noting that besides creating jobs for local people, the pipeline project is also playing a significant role in promoting Myanmar's industry.

He pointed out that the transportation and other infrastructure construction sectors also need foreign investment.

Chinese investments have ranked among the top in terms of foreign investment in Myanmar for many years. By December 2016, the number of China-invested projects in the country reached 284.

Since 2012, the China Three Gorges Corp. (CTG)—one of China's biggest hydropower giants—has engaged in Myanmar's power development. Now the company is pushing forward the Mong Ton Hydropower Project in upper Thanlwin and wind power projects in the Chin State, Rakhine State, Yangon Region and Ayeyarwaddy Region. Among these projects, the Chaungtha Wind Farm located in Ayeyarwaddy is planned to have a total 126 mw installed capacity which will be in commercial operation in 2019.

The China National Transportation Equipment & Engineering Co. Ltd., a major transportation equipment exporter in China, is building two train and crate assembling factories, respectively, in Naypyidaw and Mandalay, trying to upgrade the rail transportation of the country.

Chinese Ambassador to Myanmar Hong Liang told reporters that China has been Myanmar's largest trading partner and foreign investor for years. Along with the Silk Road Economic Belt and 21st-Century Maritime Silk Road Initiative (Belt and Road Initiative), more and more foreign investment will flow to Myanmar.

Shan Haichao, chief representative of CTG's Myanmar office, said he hopes that more wind power projects can hit the ground soon under the Belt and Road cooperation framework and relieve Myanmar's power shortages.

Multiple countries involved

"The success of the oil and gas pipeline project lies in that we have always adhered to the principle of good faith, mutual benefit and common development in the implementation of the project," said Jiang, SEAP President. Though the two pipelines connect China and Myanmar, they involve many countries and parties and benefit all, Jiang added.

The gas pipeline is invested in and operated by the South-East Asia Gas Pipeline Co. Ltd. (SEAGP), a company established in Hong Kong in 2010 by six companies from four countries. These companies are the Myanmar Oil and Gas Enterprise, China's SEAP, South Korea's Daewoo International Corp. and Korea Gas Corp., as well as India's ONGC Caspian E&P B.V. and GAIL Ltd.

The construction of the two pipelines has involved more than 220 companies from Asia, Europe and North America.

"For instance, the environmental impact assessment of the project was conducted by German companies, a lot of the mechanical equipment is from the United States, and some Indian, Myanmar, Thai and Chinese companies are contractors for the construction. The success of the project should be attributed to joint efforts of these companies," said Han, who is also assistant president of SEAP. (Reporting from Made Island, Myanmar)

Copyedited by Bryan Michael Galvan

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